BENEFITS may only rise in line with earnings rather than inflation next year, as ministers look to cover the cost of the £650 energy bailout for Universal Credit claimants.
Eight million low income households were given a one-off stipend to help with spiralling costs – but that may now be “factored in” to next year’s planned hike to the UC rate.
Benefits payments are set to be massively reduced as they may only rise in line with earnings rather than inflation next year
Ex-Chancellor Rishi Sunak had said the monthly £334 payment for single people over 25, or £525 for hard up couples, will rise by the rate of inflation next year.
But now the price of the energy bailout may be taken off that uplift as ministers look to save billions across Whitehall.
A government source said: “Claimants have been given a lot of support already this year so that should be factored in.”
It’s understood that the UC uplift could now be annual rate of pay growth – around 6 per cent – instead of the 9.9 per cent rate of inflation.
Liz Truss is under growing pressure to increase benefits next year in line with inflation as families are hit by crippling costs, but has failed to reaffirm Sunak’s pledge.
The PM and her Chancellor Kwasi Kwarteng have only confirmed that the triple lock will still apply to pension payments.
They face major criticism pressing ahead with the cuts at the same time as abolishing the 45p top rate of tax for the highest earners.
One senior Tory MP has said that Ministers will be seen as “deranged” if they hit the poorest hardest while helping those earning £150,000.
A Resolution Foundation spokesperson said: “Under no circumstances should the government be cutting working age benefits to fund tax cuts for millionaires.
“That’s the wrong priority at any time, but especially during a cost-of-living crisis.”
Liz Truss wants to rein in government spending to stop borrowing spiralling out of control after her tax cuts.
Cabinet Ministers have been told to make “efficiency savings” in their departments to help reduce the debt pile.
